CA Bimal Jain
IBM India (P) Ltd. (the Respondent) was engaged in the development and sale of software & networking products, trading of computer systems and undertaking of information technology related jobs and services. The Assessing Authority had taken a view that the activities carried out by the Respondent i.e. Business Consultancy Services (BCS) and enterprise resources planning (ERP) software implementation services fell within the ambit of ‘sale’.
The Hon’ble High Court of Karnataka, relying upon its own judgment in the case of Infosys Ltd. Vs. Dy. Commissioner of Commercial Taxes (Audit – 4.4) [W.P. Nos. 57023-57070 of 2013, dated 9-2-2015], held that the Respondent, by engaging in the activity of BCS and ERP and software implementation services, provides only services and no transfer of property in goods is involved. The integration process of the developed ERP software is undertaken by the Respondent by deputing ERP implementation team. This team plays various roles in the implementation of ERP software implementation process depending on their skills. In this process only provisioning of services are involved, without any transfer of title in goods.
It was further held that unless the goods are in existence and deliverable so that the right in the goods is transferred, VAT is not attracted and also there is no marketable commodity in existence to be sold. The entire consideration was received towards provisioning of services to the client, which had been subject to Service tax.
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